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MarketScreener Homepage  >  Equities  >  NASDAQ OMX HELSINKI LTD.  >  Finnair Oyj    FIA1S   FI0009003230

FINNAIR OYJ

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Ryanair lands $1 billion as European airline bonds begin to take off

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09/08/2020 | 12:46pm EDT
FILE PHOTO: Planes seen at Dublin airport following coronavirus outbreak

Ryanair sold an 850 million euro (768.64 million pounds) bond on Tuesday, its first in three years, in a sign that European debt markets are starting to reopen to airlines, which were crippled by the coronavirus crisis.

The sale by Europe's largest low-cost carrier is the second by an airline in Europe since the COVID-19 pandemic after majority state-owned Finnair issued a hybrid bond, which combines debt and equity features.

Investors put in 4.4 billion euros of orders for the bond, more than five times the amount Ryanair was seeking to raise, a lead manager memo seen by Reuters showed.

Ryanair's balance sheet, one of the strongest in the industry with more than 3.9 billion euros of cash at June 30 and aircraft worth about 7 billion euros, was behind investor demand, analysts said.

It also raised 400 million euros from shareholders last week.

"Ryanair is in a better place, therefore it's going to be easier for it to get the financing it wants," Azhar Hussain, head of global credit at Royal London Asset Management, said.

It is one of three airlines, together with easyJet and Southwest Airlines, that still holds investment grade ratings, ratings agency S&P said in August, noting all three are low-cost carriers.

Many airlines, including Lufthansa and British Airways owner IAG saw their credit ratings cut to "junk" status during the pandemic.

S&P said it considers Ryanair to be one of the financially strongest airlines as it removed its 'BBB' rating - two notches above junk - from 'credit watch' on Monday, making an imminent downgrade less likely.

Ryanair's bond, pricing at a yield of 3%, will pay a coupon of 2.875%, the lead manager said.

That is more than double what Ryanair paid for longer debt in 2017, but a fraction of the yields of more than 12% which its bonds hit in March. <XS1199964575>

Though slowly picking up, bond issuance by European airlines has lagged the United States, where companies including Delta and American Airlines have raised at least $36 billion since March, ABN AMRO data shows, although many have had to offer investors security over their assets.

"To me (Ryanair) says that the door is wide open for deals," Daniel Ender Aizencang, ABN AMRO fixed income strategist, said.

Still, European borrowing costs remain elevated compared to pre-coronavirus levels, keeping some away.

IAG agreed a rights issue on Tuesday after it was told by bankers that a debt and convertible issue it considered in July would be too expensive.

Ryanair, which hired Barclays, BNP Paribas and Citi to manage the sale, will use part of the proceeds to refinance an 850 million euro bond due in June 2021, a banker who worked on the deal said.

By Yoruk Bahceli


Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. 1.91% 12.8 Delayed Quote.-55.37%
DELTA AIR LINES, INC. 1.52% 31.98 Delayed Quote.-45.31%
DEUTSCHE LUFTHANSA AG 2.88% 8.22 Delayed Quote.-49.91%
FINNAIR OYJ -1.99% 0.375 Delayed Quote.-64.67%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. 6.85% 106.85 Delayed Quote.-74.21%
RYANAIR HOLDINGS PLC 2.10% 12.4 Delayed Quote.-16.99%
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Financials
Sales 2020 997 M 1 179 M 1 179 M
Net income 2020 -625 M -739 M -739 M
Net Debt 2020 1 274 M 1 507 M 1 507 M
P/E ratio 2020 -0,60x
Yield 2020 -
Capitalization 538 M 637 M 637 M
EV / Sales 2020 1,82x
EV / Sales 2021 0,92x
Nbr of Employees 6 635
Free-Float 42,9%
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Mean consensus OUTPERFORM
Number of Analysts 5
Average target price 0,48 €
Last Close Price 0,38 €
Spread / Highest target 46,7%
Spread / Average Target 28,7%
Spread / Lowest Target 1,33%
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Managers
NameTitle
Topi Manner Chief Executive Officer
Jouko Karvinen Chairman
Jaakko Schildt Senior Vice President-Operations
Mika Stirkkinen Chief Financial Officer
Jaana Maija-Liisa Tuominen Independent Non-Executive Director
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